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I have a friend who's been investing loads of cash into BTC and doing well. My advice to him (and others) is to take a certain % out every time it spikes and tr

I have a friend who's been investing loads of cash into BTC and doing well. My advice to him (and others) is to take a certain % out every time it spikes and transfer it to a more stable currency, while leaving enough in that it can continue to snowball. This is doable. For instance, he took $2k and turned it into $12k in a few months. I told him, "Take 4k out and put it into an index fund." That way, he comes out ahead no matter how you slice it, even if he loses the rest of what he has in BTC. If what he has remaining in BTC goes up to $18K, I'd take another $4K out and move it into an index fund. Rinse and repeat. It's not as risky if you run it that way.

mrep 9y ago
Except you are assuming it will just magically go up. If you are the unlucky person to do that at the peak, then you will lose most if not all of your money.
- charlesdm 9y ago
  Which is why you put $2k in, and don't bet your house on it. Or if you do bet the house, be aware you could lose it all (or be set up for life, of course)
  - antisthenes 9y ago
    The overwhelming majority of Americans do not have $2k lying around for a risky investment, nor do they understand the risks associated with crypto (especially the speculative coins). In order for someone to invest in crypto as diversification, on the order of 5-10%, they'd need to have $20-40k lying around. Needless to say, outside of the tech bubble that situation is quite rare.
mcguire 9y ago
"...who's been investing loads of cash into BTC and doing well." I have a problem with the terms "investing" and "doing well" here. Buying bitcoin is not investing. You are not funding any productive enterprises---not even indirectly as in buying stocks on the secondary market. You are giving someone money in return for a ledger entry. You expect someone to give you more money for that ledger entry at some time in the future, which is the problem with... An "investment" in bitcoin isn't doing well, or doing poorly, or doing anything. A stock can do well, if the enterprise it represents is producing economic value and thus the stock represents an increasing value (and assuming the market recognizes the increase, which is another discussion). If you BTC is worth more today than it was yesterday, the only thing that has changed is the price (and the conversion of some more coal into heat and carbon dioxide) and prices don't have anything resembling inertia. The "doing well" can turn to "doing poorly" tomorrow with nothing more than a change of market opinion.

mrep 9y ago

Except you are assuming it will just magically go up. If you are the unlucky person to do that at the peak, then you will lose most if not all of your money.

charlesdm 9y ago
Which is why you put $2k in, and don't bet your house on it. Or if you do bet the house, be aware you could lose it all (or be set up for life, of course)
- antisthenes 9y ago
  The overwhelming majority of Americans do not have $2k lying around for a risky investment, nor do they understand the risks associated with crypto (especially the speculative coins). In order for someone to invest in crypto as diversification, on the order of 5-10%, they'd need to have $20-40k lying around. Needless to say, outside of the tech bubble that situation is quite rare.

mcguire 9y ago

"...who's been investing loads of cash into BTC and doing well." I have a problem with the terms "investing" and "doing well" here. Buying bitcoin is not investing. You are not funding any productive enterprises---not even indirectly as in buying stocks on the secondary market. You are giving someone money in return for a ledger entry. You expect someone to give you more money for that ledger entry at some time in the future, which is the problem with... An "investment" in bitcoin isn't doing well, or doing poorly, or doing anything. A stock can do well, if the enterprise it represents is producing economic value and thus the stock represents an increasing value (and assuming the market recognizes the increase, which is another discussion). If you BTC is worth more today than it was yesterday, the only thing that has changed is the price (and the conversion of some more coal into heat and carbon dioxide) and prices don't have anything resembling inertia. The "doing well" can turn to "doing poorly" tomorrow with nothing more than a change of market opinion.